Corporations in 100 Pages

Holger Spamann is the Lawrence R. Grove Professor of Law at Harvard Law School; Scott Hirst is Associate Professor of Law at Boston University; and Gabriel Rauterberg is Assistant Professor of Law at the University of Michigan. This post relates to their recently-published book, Corporations in 100 Pages.

We have just published Corporations in 100 Pages—an introduction to corporate law for students and anyone else interested in the foundations of corporate law. The book provides an accessible, self-contained presentation of the field’s essentials: what corporations are, how they are governed, their interactions with their investors, and other stakeholders, major transactions (M&A), and parallels with other legal entities, including partnerships. Optional background chapters cover the investor ecosystem, contemporary corporate governance, and corporate finance. The book’s exposition of doctrine and policy is nuanced and sophisticated, yet short and simple enough for a quick read.

We hope it will help the struggling student or young professional, but just as importantly, we hope it will allow teachers to spend less time on the basics and more with more complex topics. For those interested, it could be assigned alongside a casebook or simply suggested as a source for those finding difficulty with the material. We provide more information about the book below.

As an example of the book’s approach, Chapter 1, “Corporations & Corporate Law,” introduces the book by addressing two questions: What are corporations? And what is corporate law? The chapter discusses the corporation as formally an abstraction to which the law assigns right and duties, but describes how its extraordinary usefulness lies in how the corporation allows large groups of people to organize relationships involving multiple assets, such as by pooling funds, transferring them to the corporation, and then allowing the corporation to serve as a single contracting interface with third parties. The chapter discusses how corporate law, as the subject is taught in law schools and discussed in practice, consists of the body of rules that govern the relationships among a corporation’s shareholders, its board of directors, and its managers; the relationships within each group; and the powers of each group to affect the corporation’s affairs. Corporate law is thus only a small subset of the far larger set of laws governing corporations, which includes “antitrust law,” “consumer law,” “environmental law,” and far more. The chapter ends by providing examples of corporations, such as a small private corporation and a large public one, which illustrate the important legal features of the corporate form.

Another example is Chapter 5, “Fiduciary Duties,” where we try to provide a clear exposition of the basics of corporate fiduciary doctrine in twelve short pages. We introduce the corporate fiduciaries—officers, directors, and controlling shareholders (where one exists)—and the principal fiduciary duties of care and loyalty. We distinguish between standards of conduct and standards of review, and explain the two main standards of review that apply to fiduciary duties in corporate law, the “business judgment rule” and “entire fairness.” The chapter then explains how these standards of review apply to the paradigm cases of self-dealing and mere carelessness, as well as to cases involving corporate opportunities, bad faith, knowing violations of law, and (lack of) candor or oversight.

We attempt to give a complete overview of the field as taught in a typical law school course and, we hope, encountered by fresh associates in corporate law practice. Chapter 4 discusses shareholder voting not only under corporate law but also under the SEC’s proxy rules. Chapter 5’s discussion of fiduciary duties—described above—is followed by chapter 6’s discussion of their enforcement in shareholder litigation. In addition to the rules for derivative lawsuits, indemnification, and insurance, we also discuss the incentives for plaintiff lawyers and defendants and the resulting settlement dynamics. The longest chapter is chapter 7 on mergers and acquisitions. We again cover both corporate and securities law, but also introduce basic transaction structures, takeover defenses, controlling shareholder issues, and merger litigation. Chapter 8 gives a brief overview of SEC disclosure rules before focusing on 10b-5 liability and insider trading. Chapter 9 covers creditor rights, emphasizing that the most important ones tend to be laid down in contract.

Throughout, we try to provide the financial and practical background that elucidates the functioning and the purpose of the rules. Such background is partially integrated into the chapters, and partially separated out into specialized chapters or sections on corporations as businesses (chapter 2), the agency conflict (chapter 3), and the debt-equity conflict (chapter 9.A). Because we believe that understanding corporate law requires a basic understanding of corporate finance and the various players in the investment landscape, we provide optional background chapters on these topics at the end of the book (chapters 12 and 13). For broader context, chapter 10 deals with issues now generally known under the header “ESG.” Finally, we briefly summarize agency law (chapter 3.D) and other entities including partnerships (chapter 11).

We have posted the firstfifth, and seventh chapters on SSRN, which cover “Corporations & Corporate Law,” “Fiduciary Duties,” and “Mergers & Acquisitions,” respectively.

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One Comment

  1. Krish kalla
    Posted Wednesday, November 18, 2020 at 6:42 am | Permalink

    Kindly make it available in India